It appears Microsoft is continuing to ignore my advice about Yahoo.
In early October, there were rumors that Redmond was considering another bid to purchase Yahoo. Back in February 2008, Microsoft offered to buy the Internet pioneer for $44.6 billion, an offer rejected as insultingly low by the board of directors of Yahoo, which today is worth less than half that.
When the October rumor briefly surfaced -- it was bumped off the radar screen by the death of Apple co-founder Steve Jobs -- I argued that 1) Microsoft should have considered itself fortunate its original offer Yahoo was dismissed and that 2) buying the stumbling content provider with a large audience but no focus at a discount price would be no bargain.
But lessons sometimes come hard in Redmond. From the New York Times DealBook:
Microsoft has signed a nondisclosure agreement with Yahoo, according to a person briefed on the matter, formally lining itself up as another potential bidder for the struggling Internet company.
According to DealBook, Microsoft is in talks with other prospective buyers about some kind of partnership. Other firms reported to be interested in acquiring Yahoo are private equity firms Silver Lake -- which sold Internet communications company Skype to Microsoft last May -- and TPG Capital. Both of these firms reportedly already have been allowed to inspect Yahoo's financial records.
The Canadian Pension Plan Investment Board, which controls a $152 billion fund, also reportedly is interested in a large ownership stake in Yahoo.
With a market cap of $18.9 billion and traffic exceeded only by that of Google, Microsoft sites and Facebook, Yahoo clearly has assets. It also has problems, which means generating sufficient value from those assets will be a formidable challenge. Which probably explains why there haven't been any reasonable offers for Yahoo this time around -- investors aren't sure if value can be "unlocked," as they like to say.
Since Microsoft isn't an Internet company -- yes, I know, it has the money-losing Bing search engine; that still doesn't make it an Internet company -- it's not likely to hold the key to Yahoo's assets lockbox. Why spend billions to find that out the hard way?